Foreign Inflows into US Equities Slow, While EM and South Korea/Taiwan Flows Recover at the Margin

Overview

Using high-frequency fund-flow and regional investor-flow data, Nomura examines changes in foreign investors' allocations to US equities, US bonds, and emerging-market assets. The report's central conclusion is that inflows into US equities remain positive but have lost weekly momentum, while flows into emerging-market ETFs and flows from South Korean retail investors and investors in Taiwan, China into USD bonds have improved to varying degrees at the margin.

Core views

The report first notes that, from August 14 to 20, total foreign inflows into US-related funds were USD2.2bn, below the previous week's USD3.2bn. The title links this slowdown to the drag on market sentiment from elevated US yields. Flows remained heavily concentrated in equities: US equity ETFs and mutual funds received USD1.9bn in inflows, a marked slowdown from USD3.3bn in the previous week; US bond ETFs and mutual funds received USD247mn in inflows, recovering from outflows of USD86mn in the previous week. Thus, US assets continued to receive net foreign inflows overall, but the weekly strength of equity flows declined, while the improvement on the bond side was relatively limited in scale. On a month-to-date basis, US-related funds have attracted USD9.4bn in foreign portfolio flows in August, of which USD9.1bn went into equity funds and USD346mn into US bond funds. US equity funds recorded inflows of USD12.0bn in July. The USD9.1bn received in August through the report's observation period still represents substantial net inflows, but has not yet reached July's level. This comparison supports the report's assessment that foreign inflows into US equities are slowing rather than reversing. Weekly flows into emerging markets strengthened slightly. From August 14 to 20, emerging-market-related ETFs received inflows of USD2.3bn, above the previous week's USD2.2bn; equity funds received USD2.2bn and bond funds USD147mn, meaning the increase was likewise driven mainly by equity assets. However, emerging-market-related funds have received USD6.7bn month-to-date in August, below the USD8.2bn recorded in July 2026, indicating that the marginal weekly recovery has not yet lifted the month's cumulative total above the prior month's level. Net purchases of US portfolio assets by South Korean retail investors rebounded markedly. From August 15 to 21, South Korean retail investors made net purchases of USD1.3bn in US assets, up from USD534mn in the previous week, including net purchases of USD987mn in US equities and USD275mn in US bonds. Despite the acceleration in the latest week, month-to-date net purchases in August were only USD2.9bn, still below USD5.5bn in July 2026, showing that a short-term recovery in demand coexists with a slowdown in the monthly total. Flows from investors in Taiwan, China into USD bonds also improved. From August 14 to 20, USD bond ETFs listed on the Taiwan exchange received inflows of USD304mn, up from USD179mn in the previous week. Month-to-date net purchases in August totaled USD315mn, compared with net sales of USD1.5bn in July 2026. The direction of flows has shifted from selling to buying during the month, although cumulative net purchases through the observation period remain modest. These data use fund listing locations and investor bases as proxies for cross-border flows: Nomura assumes that US equity and bond funds listed on non-US exchanges are held mainly by non-US retail investors, while emerging-market funds listed on non-emerging-market exchanges are held mainly by foreign investors. Accordingly, the report measures high-frequency, trackable proxies for fund flows rather than complete direct statistics covering all cross-border securities transactions.

Analysis framework

The report first aggregates foreign flows into US-related funds, then breaks them down into equities and bonds while comparing the previous week, August month-to-date totals, and July 2026 data. It then applies the same period-comparison approach to emerging-market ETFs and supplements this with two regional channels: South Korean retail purchases of US assets and purchases of USD bonds by investors in Taiwan, China. Cross-border investor identities are identified by proxy using fund listing locations and their principal investor bases.

Methodology notes

• Event-Driven Strategy and Behavioral FinanceFund Flow/Positioning Analysis

  High-Frequency Cross-Border Fund-Flow Proxy Method

  The report uses US-related funds listed on non-US exchanges as a proxy for non-US retail flows and emerging-market funds listed on non-emerging-market exchanges as a proxy for foreign flows. It combines these with local trading data from South Korea and Taiwan, China to compare changes in asset allocation on a weekly, month-to-date, and previous-month basis.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• US Equity ETFs and Mutual Funds

  Foreign flows remain net positive, but the weekly pace of inflows has slowed markedly.

  Strengths

  Month-to-date inflows in August total USD9.1bn, remaining the primary source of inflows into US-related funds.

  Weaknesses

  Inflows fell from USD3.3bn in the previous week to USD1.9bn from August 14 to 20.

  Comparison

  Month-to-date inflows in August total USD9.1bn, below USD12.0bn in July 2026.

  Risks

  Elevated US yields are weighing on market sentiment.

• US Bond ETFs and Mutual Funds

  Foreign flows shifted from net outflows in the previous week to modest net inflows.

  Strengths

  Weekly inflows were USD247mn, bringing month-to-date inflows in August to USD346mn.

  Weaknesses

  The scale of inflows was significantly smaller than that of US equity funds.

  Comparison

  The previous week saw outflows of USD86mn.

• Emerging-Market-Related ETFs

  Weekly inflows increased slightly, driven mainly by equity funds.

  Strengths

  Weekly inflows were USD2.3bn, including USD2.2bn into equity funds.

  Weaknesses

  Month-to-date inflows in August remain below July's level.

  Comparison

  Weekly inflows rose from USD2.2bn to USD2.3bn; month-to-date inflows were USD6.7bn, below July's USD8.2bn.

• US Portfolio Assets Held by South Korean Retail Investors

  Net purchases increased markedly in the latest week and were concentrated in US equities.

  Strengths

  Weekly net purchases were USD1.3bn, including USD987mn in US equities and USD275mn in US bonds.

  Weaknesses

  Month-to-date net purchases in August remain below July's level.

  Comparison

  Weekly net purchases rose from USD534mn to USD1.3bn; month-to-date purchases were USD2.9bn, below July's USD5.5bn.

• USD Bond ETFs Listed on the Taiwan Exchange

  Weekly inflows increased, while month-to-date flows shifted from selling in July to buying.

  Strengths

  Weekly inflows were USD304mn, above the previous week's USD179mn.

  Weaknesses

  Month-to-date net purchases in August were only USD315mn.

  Comparison

  July 2026 saw net sales of USD1.5bn.

Key data

• Weekly Foreign Inflows into US-Related FundsUSD2.2bnFrom August 14 to 20, versus USD3.2bn in the previous week.
• Weekly Foreign Inflows into US Equity FundsUSD1.9bnFrom August 14 to 20, versus USD3.3bn in the previous week.
• Weekly Foreign Inflows into US Bond FundsUSD247mnFrom August 14 to 20, versus outflows of USD86mn in the previous week.
• August Month-to-Date Inflows into US-Related FundsUSD9.4bnDriven mainly by cumulative inflows of USD9.1bn into US equity funds; bond funds received cumulative inflows of USD346mn.
• Inflows into US Equity Funds in July 2026USD12.0bnAbove the USD9.1bn recorded in August through the observation period.
• Weekly Inflows into Emerging-Market ETFsUSD2.3bnFrom August 14 to 20, versus USD2.2bn in the previous week; equity funds received USD2.2bn and bond funds USD147mn.
• August Month-to-Date Inflows into Emerging-Market FundsUSD6.7bnVersus USD8.2bn in July 2026.
• Weekly Net Purchases of US Assets by South Korean Retail InvestorsUSD1.3bnFrom August 15 to 21, versus USD534mn in the previous week; comprising USD987mn in equities and USD275mn in bonds.
• August Month-to-Date Net Purchases of US Assets by South Korean Retail InvestorsUSD2.9bnVersus USD5.5bn in July 2026.
• Weekly Inflows into USD Bond ETFs in Taiwan, ChinaUSD304mnFrom August 14 to 20, versus USD179mn in the previous week.
• August Month-to-Date Net Purchases of USD Bonds by Investors in Taiwan, ChinaUSD315mnVersus net sales of USD1.5bn in July 2026.

Impact & implications

The report shows that US assets continue to receive net foreign inflows, but weekly inflow momentum into US equities has weakened, while US bonds have seen only a modest recovery. Weekly inflows into emerging-market ETFs increased slightly, and short-term purchases by South Korean retail investors and investors in Taiwan, China also strengthened. However, August cumulative flows for emerging-market funds and South Korean retail investors remain below July levels, indicating that the recent marginal improvement has not yet translated fully into stronger monthly fund flows.

Risks

• Elevated US yields have weighed on market sentiment and coincided with slowing foreign inflows into US equities.

What to watch

• Monitor weekly foreign flows into US equity and bond funds and cumulative August totals.
• Monitor whether the marginal weekly recovery in emerging-market ETF inflows translates into stronger cumulative monthly inflows.
• Monitor the sustainability of South Korean retail purchases of US equities and bonds.
• Monitor whether flows into USD bond ETFs in Taiwan, China sustain the shift from net selling to net buying.